MICHAEL MORELL:Michael, welcome to Intelligence Matters. It is great to have you on the show. MICHAEL ALLEN:Thanks for having me. MICHAEL MORELL:So I have to start with a disclaimer. I, too, work at Beacon Global Strategies. So I need to put that out there and so my listeners know about it. So now that that's gone, I wanted to say I have been wanting to have you on the show for some time. You and I worked very closely together when you were the staff director of the House Intelligence Committee and I was deputy director. MICHAEL ALLEN:We did. MICHAEL MORELL:On some very good things like the Bin Laden operation and some not so good things, like the Benghazi stuff. MICHAEL ALLEN:Sure. MICHAEL MORELL:But I really enjoyed working with you and I thought we got a lot of good work done and I've been wanting to have you on. And I think this is the perfect moment to do that because the director of National Intelligence is in the news. There's not great understanding, I don't believe, in what that job is and what it should be. And you happened to be one of a handful of people who are really expert on that because you wrote, literally, the book, called Blinking Red, on why the DNI was created in the aftermath of 9/11. So I am thrilled to have you on the show to talk about all that. MICHAEL ALLEN:Thanks for having me. MICHAEL MORELL:Before we get to that, I do want to ask you a couple of questions about the recent news. And the first question is about domestic terrorism-- MICHAEL ALLEN:Right-- MICHAEL MORELL:--is in the news. It's in the news because of El Paso. I guess we're still not sure about the motivations of the shooter in Dayton. We'll see. But clearly the individual in El Paso was motivated by white supremacy in sending a message. And my question for you on Intelligence Matters is, what's the proper role of the intelligence community in what is strictly domestic terrorism? MICHAEL ALLEN:I think we have to look to the FBI to be the lead in this particular area. As you well know, Michael, after 9/11 we tried to expand the writ of the FBI not to be just a law enforcement organization, but also intelligence. And I remember at the time when the executive orders were being drafted in 2004, the question came up, who would be the lead on domestic terrorism?

I remember people at the time talking about maybe the Environmental Liberation Front, ELF. And that was always the example that was used. And everybody said, yes, if it's a purely domestic terrorism situation, the FBI ought to be the lead. MICHAEL MORELL:So who in Congress would oversee the FBI looking at domestic terrorism? Would it be the intelligence committees, or would it be judiciary, or how would that work? MICHAEL ALLEN:Well, that's one of the problems in Congress. It would definitely be the intelligence committees, because they have jurisdiction over counter-terrorism and counter-intelligence investigations. But the judiciary committee doesn't take that lying down. I mean, they would also expect to be briefed. This is one of the things that there's a lot of creative tension in the jurisdictional (LAUGH) setup in the Congress. MICHAEL MORELL:Do you have a sense to what degree this administration is focused on domestic terrorism as an issue as compared to, say, the Obama administration was? MICHAEL ALLEN:I think that it has become an issue that is increasing in the public's consciousness in the last few years, for sure. I think that the Federal Bureau of Investigation has been looking at it for some time. And I'm basing this largely on what Director Ray has said in his annual testimony before the Congress.

And certainly now, after these tragic events that have really been going on for a while now, and not just in the United States. There have been other (LAUGH) similar things going on, it feels like, in Europe. I feel like this is going to swiftly rise to the very top of the FBI's agenda. MICHAEL MORELL:So Michael, the other issue I want ask you about, and I know that a lot of your current clients ask you about this all the time, is the U.S.-China trade war.

Which, in the last 24 hours, has gotten worse. And I'd love your sense for what do you think the Trump administration is thinking about this, what do you think the Chinese are thinking about this? And is there a resolution to this in the near to mid-term, or is this going to go on for a while? What's your sense of what's motivating both sides and where we're headed? MICHAEL ALLEN:I think this is going to go on for some time. I have sort of shorthanded this as there've been skirmishes so far, but to me, really, the trade war began in earnest last Thursday and here into the day after where we've declared China a currency manipulator.

We are emptying the barrel. They are shooting back at us. And I think we are in for a long ride here. I just don't think that we are getting where we need to get, the United States, on the structural reforms that are important to us. I don't think the Chinese can give on some of those particulars-- MICHAEL MORELL:And by structural reforms, you mean… MICHAEL ALLEN:I mean the subsidies that are given to national champions, Chinese companies that compete with U.S. companies around the world-- MICHAEL MORELL:Companies from the Chinese government… MICHAEL ALLEN:From the Chinese government. And I also mean forced technology transfer. As you know, Michael, this has been one of the bipartisan issues in the Trump era of people saying, 'You know what? We needed to get tougher on China. And we're worried about our intellectual property transfer.'

And so those are really, really hard things that we're asking for. We've got to make some progress on it. I don't think the Chinese are willing to give on them. And I don't think that they have experienced enough pain. Which actually gets to sort of an interesting economic, maybe even intelligence issue, which is, what's driving the leadership in China? Do they feel like they need to compromise? And is that related to the health of the Chinese economy? MICHAEL MORELL:You know, you have to think that as the pain rises here, and as the risk of a recession rises here, it gives President Xi in China some confidence that we might be the ones that end up rolling, rather than China. So it gives him a sense of hanging tough. MICHAEL ALLEN:I think so. I think so, especially in the last few days. Especially with the way the stock market behaved yesterday. MICHAEL MORELL:Okay, the DNI. Director of National Intelligence. Maybe the place to start, Michael, is why was the DNI created? MICHAEL ALLEN:Good question. That's (LAUGH) why I wrote the book, frankly, because so many people still ask that question. I think one of the lessons drawn from 9/11 was that we needed a better intelligence service. We need better intelligence to be able to fight a new war, as we used to call it, against international terrorism.

And so the language that was used at the time was that we needed a quarterback. We needed somebody who was empowered to be able to shift funds, shift people, and otherwise direct assets, collection assets, against new targets. And so frequently they used the term quarterback. And I think as the book tries to unpack, and I think as we've experienced this over the last dozen years or so, that we've not lived up to that sort of supposition, that we're creating this all-empowered person who can direct this sprawling enterprise called U.S. intelligence. MICHAEL MORELL:So you were in the Bush White House at the time that this debate was raging. And if I remember correctly, correct me if I'm wrong, but if I remember right, the Bush administration was initially opposed. Walk me through why and what ended up changing there. MICHAEL ALLEN:The idea for a more empowered Director of National Intelligence was an idea that had been around, literally, since the National Security Act of 1947. Most people had resisted it over time because they believed, 'Hey, you know what? We've already got a Director of Central Intelligence. That's the CIA director's job.'

And I think that was the initial view of the Bush administration was, 'Hey, you know what, we've undergone tremendous organizational change already after 9/11 with the creation of the Department of Homeland Security. So why get into this very exquisite type of surgical operation?' I think, however, that once the 9/11 Commission came out the way they did, in the heat of the president election-- MICHAEL MORELL:They called for it. MICHAEL ALLEN:They called for it. They came out and recommended a super empowered director of national intelligence. I think it then just got into the political ether and people were trying to outdo themselves on who was going to be more supportive of what this famed bipartisan group of experts had recommended. Now, there's controversy, but that was part of the political equation. MICHAEL MORELL:And it's my understanding that the 9/11 families also played a role here that-- MICHAEL ALLEN:Very big role-- MICHAEL MORELL:--pushed really hard the 9/11 Commission recommendation. MICHAEL ALLEN:They really did. They were out there. They really helped engineer one of the greatest lobbying efforts ever. They were up on the Hill and they made sure a lot of members of Congress, especially in the Senate, were faithful to what the 9/11 Commission had recommended. MICHAEL MORELL:Okay, great. So what is the DNI supposed to do? What do you think the key things are that should be in the DNI's job jar? If you were the DNI, how would you prioritize how you spent your day? MICHAEL ALLEN:So I think we've had to go through an adjustment in our expectations about what the director of National Intelligence's role is in the United States government. As I mentioned, people at the beginning thought it would be a quarterback. They thought that if a new threat arose, that it would be the director of National Intelligence who could move a cell of people from the National Security Agency to work more closely with CIA folks in order to attack a new threat.

I think as we got into this more and more, we realized that's not actually a practical way for the DNI to operate. And the DNI settled into a more strategic role, which was, 'Where does the United States intelligence community need to invest over the medium- to long-term? How can we resolve disputes within the inter-intelligence community process over budget and policy and the rest?'

And so I think, and I often say this, this is the unsexy but important plumbing work of U.S. intelligence to try and get the system to work correctly so that the people who are really downrange, like your former colleagues at CIA and, frankly, NSA and others, can succeed. MICHAEL MORELL:So Michael, you were in the Bush White House both before the creation of the DNI and then after the creation of the DNI. And then you were on the Hill after the creation of the DNI. Do you think the creation of the DNI improved the performance of the intelligence community? MICHAEL ALLEN:I think it has, because some of the debate has changed about the viability and importance of the director of National Intelligence. And let me give you an example. When the Congress is faced with a crisis in the intelligence community, it needs someone to turn to, to deal with a particular problem.

Things have gotten more complicated. It's not just a CIA problem anymore, or an NSA problem anymore. Things have become a problem for the 17 agencies across the intelligence community. So Edward Snowden comes out. The administration and the Congress needs someone to turn to, to try and do not just damage assessments, but also, how did this happen?

What policy judgments need to be made to make sure this doesn't happen again or whatever needs to be reformed? You're not going to ask the NSA to help reform themselves after something. So you need, like, the DNI to turn to. And I think people began to see, you know what, this is a useful place for us to be able to turn to. MICHAEL MORELL:What about in terms of managing, trying to close collection gaps? You know, when there's something that we need to understand in the world that we don't, the ability to manage that process so that that gets done and there's not a lot of overlap in the process? MICHAEL ALLEN:So my sense is that the DNI has not succeeded in a particularly notable fashion here. I know they're trying. I know that they want to look over the horizon and say, 'Hey, you know what? We really need to shift collection to, for example, China over time.'

But they can write plans. They can try and make sure things are coordinated. But the end of the day, I think CIA and NSA, and I keep mentioning them because they're the two real organs of the intelligence community, are largely making their own budgetary decisions on what they need to perform their missions.

And so I don't think that the DNI is able to move people or reach into-- of course they can't reach into a station somewhere in Asia and shift their collection priorities. At least, certainly not in the medium-term. And so I think that's where the DNI struggles and I think there's a fair debate here about whether the DNI should even be involved in this, other than at a strategic level. MICHAEL MORELL:So what do you think? MICHAEL ALLEN:I think that the DNI does need more authority to be able to shift priorities over the medium-term. I really do. I don't think that people, if left to their own devices, are going to be able to get out from what's in their inbox. I think that's one of the lessons that we learned from 9/11.

And so I think Congress-- and by the way, people ask me all the time, 'What would you do to strengthen the DNI?' And there are legislative fixes that you can do it. But what you really need is a president of the United States to embrace the director of national intelligence and say, 'This is my person in the job. Everyone listen. This person has authority and has my support and we need to move forward on an agenda that the DNI has laid out.' And I think that sends a signal across, you know, disparate parts of the intelligence community that, 'You know what? We need to cooperate with this person.' MICHAEL MORELL:So Michael, one of the things we look at when we talk about what difference the DNI has made is the community itself. But one of the things that I've thought about, and I actually saw play out, was that the creation of the DNI actually strengthened the CIA.

And I know that sounds odd. And the reason I say that is because it allowed the director of CIA to spend all of his or her time worried about the CIA and-- MICHAEL ALLEN:Great point-- MICHAEL MORELL:--not have to be worried about the community. And I just imagine what it would've been like under the old DCI system when Snowden happened. Because it would've meant the head of the agency. The DCI would've had to take all that time, spent all that time on the Hill, all that time with the media, right, rather than having somebody else do it. So I think that was a huge plus to the agency. And I know most of my former colleagues don't feel that way, but I saw that. MICHAEL ALLEN:I totally agree with you. General Hayden said something similar. So did the 9/11 Commission, which was, 'The world has gotten so much more complicated. The CIA director has more than a full-time job in running the collection and covert action functions of CIA. Doesn't have time to manage what satellite the NRO is going to come online with 20 years from now.' And so I do think that was an important innovation as well. MICHAEL MORELL:So Michael, there's also a debate about the size of the DNI staff. You know, some say it's too big. Some say it's not too big. Some say there's too much bureaucracy. Some say there's not. What's your view? MICHAEL ALLEN:I think there are a lot of uninformed people who just like to say since 9/11 that 'Oh my God, this staff has just grown, like topsy turvy.' I think it's fair for Congress to take a tough look at it, by the way. But you also have to look at what the statutory mission of the DNI is and then make an assessment of, 'Do we have enough people behind it?'

So just quickly, we created a National Counter-Proliferation Center. And what everybody knows even better than that is the NCTC, the National Counter-Terrorism Center. And I don't know a lot of people who are trying to cut their mission or cut their number of people. And so when you start with that-- oh, and then the counter-intelligence executive-- MICHAEL MORELL:Those are the bulk of the people right there-- MICHAEL ALLEN:That's the bulk of the people. And then you put in a healthy staff in order to sort of do strategic, analytical looks across the community. And then you're up to 80% of the people in the ODNI. So I don't think this is-- this is just something that people like to say that has been ingrained in people's heads that aren't, like, studying this. Having said that, do we need a big study of how is this working since 2004? I'm on board with that. MICHAEL MORELL:So Michael, who was the best DNI that you saw? MICHAEL ALLEN:Oh, this is a very, very tough question here. I mean, this gets back to another function of the DNI that we haven't talked about yet. And that is that the DNI is the principal intelligence advisor to the president of the United States. And this gets in a little bit to what's President Trump going to do now that-- Director Coats is leaving. And I wonder if you might agree as someone who was a PDB briefer and was in the Oval a lot. I think the DNI, first and foremost, has to have the confidence of the president. MICHAEL MORELL:Absolutely. MICHAEL ALLEN:The president has to be able to look at this person and say, 'I believe in them. I trust them. And I will defer to them on many, many issues.' That's not to say the president can't have his own views. Of course he can. So I think that that really, really matters a lot.

I think Director Clapper definitely had the confidence of President Obama. I think Mike McConnell did as well. But everybody had different strengths depending on what you were trying to accomplish. I think McConnell was more trying to make the community work.

But look, you have got to have the confidence of the president so that when you walk into the Oval Office, the president's going to say, 'All right, I agree with that intelligence assessment and I reject, you know, conspiracy theories about how the CIA arrived at that conclusion.' MICHAEL MORELL:So Michael, what do you see, then? In addition to the confidence of the president, which I agree with completely, what do you see as the key attributes that you would look for in a DNI? MICHAEL ALLEN:I really-- MICHAEL MORELL:If you were in your old job at the White House and you were asked to put together a list of the replacements for Dan Coats, what would the criteria that you would use to put somebody on that list right now? MICHAEL ALLEN:So it would be confidence of the president, which we just talked about. I think the DNI has to have some knowledge, or some working level knowledge and experience with the way the intelligence community works. It's too vast, it's too complicated for someone to just walk in totally cold and have a real agenda on where they want to see the community move. I think the next DNI has to come in and say, "Here are the three or four things I want to accomplish during my term." And they have to have the ability to get that done. And you're not going to get there if you just show up for the first time. MICHAEL MORELL:It's a big, complicated place. MICHAEL ALLEN:It's a big-- I mean, and we say this all time, but you know, let's say it again. It's an almost $80 billion enterprise with 17 agencies. Or offices, if you count some of the things within DOD. But that's a lot. That's a lot. (LAUGH) MICHAEL MORELL:So confidence of the president. Knowledge of intelligence. Would you put on that list some knowledge of foreign policy and national security? MICHAEL ALLEN:I would. I think you have at least got to have had some sort of working knowledge with this. I think you've got to be able to come into the Oval Office and talk about the Iranian Nuclear Program. The state of the Iranian economy. What the motivation might be of the North Korean leader.

I think you got to talk about the state of the Chinese economy. You've got to talk about currency manipulation, I think, at some level. Although that's largely what the treasury secretary does. I think you've got to be a player on a lot of issues. (LAUGH) Let's face it, you got to be willing to come in early, read up, get briefed, and go in there and do your job.

By the way, I also think that the president has to take regular-- any president has to be willing to take any briefings and listen to what's being presented to him or her. They can dismiss that advice, by the way. They can dismiss that assessment. It's not that any of these intelligence agencies are always right all of the time. But, you know, you have got to get in there and represent. MICHAEL MORELL:Do you have any idea how often President Trump is receiving his intelligence briefings? MICHAEL ALLEN:Not beyond what's in the newspapers. I don't. MICHAEL MORELL:It was-- it seemed to be almost every day when Mike Pompeo was at CIA because of the deep trust the president had. Going back to that confidence, right? The deep trust the president had in Mike Pompeo. And it seems to have decreased a bit since then-- MICHAEL ALLEN:Maybe so. Maybe so. MICHAEL MORELL:So Michael, the list-- we're talking about the attributes. What about relationships with the rest of the national security team? And just as importantly, relationships with the heads of the intelligence agencies? MICHAEL ALLEN:So I think that heads of the intelligence agencies is really important. But I would put right after the president the relationship with the Secretary of Defense. That may surprise you a little bit that it's not the CIA director. But I remember George Tenet, when I interviewed him for my book, talking about how it was a myth that he and Rumsfeld were implacable foes.

I think they disagreed a lot. And maybe on policy matters and the rest. But that was the most important relationship, I believe, to George Tenet. And he went out there constantly to meet with the Secretary of Defense. Why? And this gets to one of these issues on why the DNI may or may not be successful. And that's that two or three of the giant organs of intelligence-- and let's just talk about NSA and NGA, are in statute, what we call Title X agencies.

And that means that they have to support the war fighter. By the way, if you read Blinking Red, you see how much Secretary Rumsfeld fought on this particular issue on the Hill. And so did his folks on the House Armed Services Committees and the rest.

And their argument is that these particular agencies, first and foremost, need to be able to supply tactical intelligence. Tactical battlefield intelligence to the war fighter. And we don't want them coming off mission for other strategic national priorities. And so this is an inherent tension you have got to be able to have a good relationship with SecDef in order to try and resolve-- MICHAEL MORELL:Right. And if I remember-- MICHAEL ALLEN:--these issues-- MICHAEL MORELL:--correctly, Secretary Rumsfeld won most of those battles. MICHAEL ALLEN:He won a lot. MICHAEL MORELL:He won a lot of them. So he, at the end of the day, ended up weakening the DNI's role as leading the national intelligence because he wanted to maintain that control you're talking about. MICHAEL ALLEN:Yeah. And then I think Admiral Blair picked a couple of fights and may not have been able to succeed in the early Obama years. Which also, I think, sacked the DNI for a loss. MICHAEL MORELL:So when we look at all those attributes-- I have two questions for you. When you look at all those attributes, would Congressman Ratcliffe had made your list? MICHAEL ALLEN:I was happy that he would've had the support of the president. And I was pleased that he was on the House Intelligence Committee. But I'll be honest with you, I did not know him well. I knew of him-- MICHAEL MORELL:He doesn't seem to have anything else you mentioned besides that one thing. MICHAEL ALLEN:I knew of him in the sense that Republicans on the Hill that I know were mentioning to me, "He's a good member. You should talk to him." But, you know, I admit, I didn't know him. MICHAEL MORELL:Yeah. So some of the other names that are out there. Pete Hoekstra. Did you work with Pete on the committee? MICHAEL ALLEN:Very much so. He became the chairman of the House Intelligence Committee virtually in the middle of the 9/11 Commission recommendations. Or at the very beginning. And he was known as one of the big four who helped negotiate what we call the Intelligence Reform and Terrorism Prevention Act of 2004. And so he played a big role in trying to ensure that the DNI had substantial authorities. And he went up against Duncan Hunter, who was chairman of the House Armed Services Committee. MICHAEL MORELL:Would you be comfortable with Hoekstra? MICHAEL ALLEN:I would. I would. I think Pete Hoekstra is an honorable person. He's been a long-time member of the committee. He has the confidence of the president. I think he's been over in Europe probably-- MICHAEL MORELL:Ambassador to the Netherlands, I believe-- MICHAEL ALLEN:Yes. I think probably getting really steeped in some of our alliance issues and friendships over in Europe. And so I think he fits the bill. MICHAEL MORELL:What about your former boss, Mike Rogers? Former chairman of the House Intelligence Committee? MICHAEL ALLEN:Definitely so. I mean, Chairman Rogers would be an extraordinary DNI. He not only was well-known bipartisan, non-partisan member of the House of Representatives, but especially so when he was chairman. As you know, he was an FBI agent. So he has that on-the-ground perspective. When he traveled, he wanted to go out deep in the field. He didn't want to go to garden spots in Europe. He wanted to go, you know-- MICHAEL MORELL:I remember-- MICHAEL ALLEN:--to campfires. (LAUGHTER) MICHAEL MORELL:Yes-- MICHAEL ALLEN:Yeah. He was-- MICHAEL MORELL:I remember-- MICHAEL ALLEN:He wanted to go sit around with CIA officers, literally down range. And so he would be an amazing choice. MICHAEL MORELL:So Michael, maybe we can just shift gears here at the last couple of minutes and let me get your perspective on the big challenges facing the intelligence community.

And I'm not talking about Russia, China, Iran. I'm talking about making sure that the IC has the capabilities to be on the cutting edge in defending the nation, both today and ten years from now. How do you think about the big challenges that whoever the DNI, the next DNI is, that they really have to grab and tackle? MICHAEL ALLEN:Well, I mean, let's start with the role of social media. I mean, for years, we've talked about what kind of censors we need. Do we need satellites and what kind of airplanes? Now all of a sudden, you know, I'm struck by this anecdote. Maybe you'll like it to. That one of the ways President Obama allegedly, I don't know if this is absolutely true, learned about ISIS taking the Mosul Dam, was that someone showed the Obama White House a tweet from one of the ISIS members who had, of course, just like people would do here in the United States, took a picture of themselves out there on the Mosul Dam. I bet that beat CIA or anyone else's-- MICHAEL MORELL:I do know one of the first ways we knew that the Russians were in Ukraine was through social media. MICHAEL ALLEN:Yeah. Isn't that amazing? I mean, so it's not just, 'What do we hear from CNN and what are you hearing from your ambassador?' You're being blitzed with this information. And add to that drones and social media. I mean, we have a lot of new stuff that we need to go with. It may be, by the way, that that's cheaper. And we should build platforms that aren't $2 billion drones that fly over the Persian Gulf and get shot down.

I mean, maybe you have ten of those that are much cheaper that can achieve the same mission. But I think we have got to be thinking creatively about how collection is changing. The other thing is of course trying to make sure the intelligence community adapts and is able to get a hold of some of our technological advantage and pump it into the everyday mission of CIA and NSA. I have the impression they do a pretty good job of that through CIA's venture capital arm, which I know you're familiar with and I think you've had Chris Darby on this show-- MICHAEL MORELL:In-Q-Tel. MICHAEL ALLEN:--called In-Q-Tel. But I think those are two of the big challenges. MICHAEL MORELL:The president's attacks on the intelligence community. How should we think about those? MICHAEL ALLEN:I think that this is part of the president getting more comfortable with the people who serve him. I think it was a surprise to the president, it was a surprise to most of the country, (LAUGH) when he was elected that night. I don't think-- you know, he didn't grow up here in Washington getting briefed by CIA or understanding its mission. And that's not a criticism, that's just where he came from. And the American people voted for him.

But I think that his first experience with the intelligence community may have been on this Russia matter, which he was a skeptic about. In retrospect, he might've had some justification for, you know, how he was briefed on certain things in the early days. And so I think he got a negative impression.

I don't think that's the right view of the intelligence community. But I think that, you know, I can sort of analyze it and see how he might've come to some of these conclusions. But you mentioned that, I mean, Pompeo was an excellent CIA director and the president had confidence in him. That's what's important over time, is to let the president know that hey, you know what, these people are here to serve you. MICHAEL MORELL:So Michael, when did your book come out? MICHAEL ALLEN:2013, I think? MICHAEL MORELL:So it came out in 2013. It's called Blinking Red, Crisis and Compromise in American Intelligence After 9/11. And it's one of those books that lives forever because it's a history of why the DNI was created. And this is a perfect time to go get that book and read it, if you're interested in this whole director of national intelligence issue. Michael, thanks for spending time with us. MICHAEL ALLEN:Thanks for having me. MICHAEL MORELL:You're welcome. * * *END OF TRANSCRIPT* * *